Yes, Pete Hines said the consequences will mostly be confined to each quest. Which is not a good thing, but pretty standard for RPG's these days. But hey, there's always AP.
As far as the dog in Oblivion, some of the previews I read said it was obviously scripted, which I tend to believe since there's nothing like that in the game, or even in FO3 apparently. Now Bethesda does say they announced on the forums that AI was being downgraded, but they certainly didn't go out of their way to inform the general public mislead by their demo.